Randolph Company reported pre-tax net income from continuing operations of $800,000 and taxable income of $500,000. The book-tax difference of $300,000 was due to a $200,000 favorable temporary difference relating to depreciation, an unfavorable temporary difference of $80,000 due to an increase in the reserve for bad debts, and $180,000 favorable permanent difference from the receipt of life insurance proceeds. Randolph Company's applicable tax rate is 21%. a. Compute Randolph Company's current income tax expense. b. Compute Randolph Company's deferred income tax expense or benefit. Also prepare the journal entries for a. and b. above.

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A:

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